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U.S. consumers feel force of global jitters
By JEFF HARRINGTON, Times Staff Writer
Melissa Agness works in the homebuilding industry, one of the few that has been relatively recession-proof the last few years. Not that it offers her much comfort. The 25-year-old Clearwater resident frets about job security, agonizes about where to invest her money and is leery of buying any big-ticket items. "It's more the war than anything else," Agness said. "I just don't know how this is going to affect everything -- if it's going to have a big effect on my life or how I'm going to feel it." Far from being alone, Agness is part of a fast-growing demographic: the young and the worried. Increased anxiety over a possible war in Iraq has driven consumer confidence in the economy to its lowest level in a decade, according to two separate reports released Tuesday. And in somewhat of a switch, younger Floridians are growing wary at a faster pace than older Floridians. Part of that is because the economic expectations of the over-60 generation "were already pretty darned low," said Chris McCarty, director of the University of Florida Survey Research Center, which compiles the monthly state report on consumer confidence. Nevertheless, McCarty noted, the younger generation has actually become more pessimistic than its older counterpart about the odds for an economic upturn within a year. Nationally, the Consumer Confidence Index plummeted almost 15 points in February to 64.0 -- its lowest reading since October 1993 -- from a revised 78.8 in January, the Conference Board reported Tuesday. Blame was placed on a bleak job outlook and rising oil prices along with the pending war with Iraq. "It's a bigger drop than expected and at a pretty low level," said Josh Feinman, chief economist for Deutsche Asset Management in New York. "On all fronts, it's jitters about the upcoming war with Iraq." Florida's consumer confidence index dropped from 83 to 80, its lowest reading since November 1992. Expectations about business conditions over the next year fell eight points overall to 59, and plummetted 14 points among those under age 60. Perceptions as to whether it is a good time to buy big-ticket household items fell six points to 94. McCarty said the move away from big-ticket purchases despite record-low interest rates means consumers doubt the economy will recover any time soon. There are plenty of reasons for anxiety beyond the Iraqi standoff. Auto sales plummetted in January along with sales of some expensive household items like appliances. The stock market continues to sputter with the Dow Jones Industrial Average struggling to get back to 8000. Businesses stung by soured stock investments have been slow to rehire hundreds of thousands of laidoff workers. Thomas DeMars, a property inspector in Clearwater, said the shaky job market is a big reason he and his wife are holding off buying a new car they need. "We're not going to wait until unemployment drops a percent but we are waiting till we feel the job market mood is better," he said. "You're talking to someone who is 56 years old. . . . If I was out of work, I would be hard-pressed to get another job." Not everyone thinks the country will be in a funk for long. Thomas Foote, 62, a retired electronics technician in Seminole, said he has not changed his spending habits despite the nation's climate of uncertainty. "I think the economy is going to get better over the next year," he said, anticipating the Iraq conflict will be over by April. "The worries are overblown as far as the situation with the economy right now." The housing industry continues to be one of the few economic stalwarts, with historic low interest rates still spurring new mortgages and refinancings. Underscoring that resilience, showing sales of previously owned homes surged in January to their best month ever, coming in at a seasonally adjusted annual rate of 6.09-million, the National Association of Realtors said Tuesday. That represented a strong 3 percent increase from December and defied analysts' expectations that home sales would dip slightly to a rate of 5.80-million units. Nationally, the 6.09-million existing homes sold last month represented a 2.2 percent increase from the 5.96-million units that changed hands in January 2002. The median price was up 6.7 percent from January 2002, when it was $150,300. In Florida, sales of existing, single-family homes rose to 10,540 last month, up 13 percent from a year ago. The statewide median price rose 11 percent to $142,900. Sales were even more brisk in the Tampa-St. Petersburg-Clearwater metropolitan area, but price gains were more moderate. A total of 1,820 homes were sold last month, up 18 percent from a year ago. The median sales price rose 7 percent to $137,000 compared to $128,300 in January, 2002. Clearly, though, there are growing concerns that the housing bubble may burst, particularly in high-priced markets on both coasts. McCarty doubts dwindling consumer confidence has bottomed out yet "particularly if the potential war in Iraq continues to drag on. "One thing that's very different between this one and the war in the early 1990s is that one happened very quickly," he added. 'Here, a lot of people are seeing reserves being called up. It's hitting closer to home." Stephanie Sullens relates well to the ups and downs of the moment. The 24-year-old and her husband just bought a new house with no money down at an extremely low interest rate. Yet, they are relying largely on hand-me-downs and garage sales to furnish it, fearful of racking up too much debt. She works as an administrative assistant at an engineering firm. Yet, she has been unable to find a job in her chosen field, psychology, "which is just reflective of the job market now." And Sullens is reminded of the pending war daily. Her office's other administrative assistant was called up in the reserves, leaving her and a temporary to pick up the slack. "I don't want to get too worried" about the effect of the war, she said. "I'm nervous but I know we'll be able to pull through." -- Information from Times wires was used in this report. Jeff Harrington can be reached at harrington@sptimes.com or (813) 226-3407.
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From the Times Business report
From the AP
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